Fed's Lockhart: Oil shock could lead to QE3

Arlington, Va. (CNNMoney) -- If oil prices continue to climb, it could force the Federal Reserve to make a new round of asset purchases, according to Atlanta Fed President Dennis Lockhart.

Appearing at the National Association of Business Economics in Arlington, Va., Lockhart said that while he doesn't think additional purchases are currently warranted, more stimulus could be needed if oil prices continue to climb.

"I think at the $120 range ... it's a manageable level," he said. "Around $150 it becomes a much more serious concern."

The Fed announced plans to buy $600 billion in long-term Treasuries last November, a process known as quantitative easing, or QE2 because it is the second round of such purchases. Since then, economic growth has picked up, leading some to call for an early end to QE2.

Lockhart, who is not currently a voting member of the Federal Reserve's policy making committee, declined to say whether he thought "QE3" could get past the current committee, which is seen as somewhat more hawkish on inflation.

"I remain doubtful enough as to its efficacy that if at any time between now and June, it should prove demonstrably counterproductive, I will vote to curtail or perhaps discontinue it," Fisher wrote in prepared remarks.

But there remains a fair amount of disagreement among Fed members over whether the economy still needs help, or inflation is the bigger worry.

In Congressional testimony last week, Fed Chairman Ben Bernanke said he hadn't closed the door on the possibility of a new round of Treasuries purchases, and largely brushed off concerns about rising prices.

Lockhart said while the Fed needs to keep an eye on inflation expectations, he doesn't think the labor market has recovered enough for higher wages, a core component of inflation, to take hold.

He said despite the strong February jobs report, "it is premature to declare a jobs recovery is firmly established."